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The Portfolio Choices of Young and Old Active Mutual Fund Managers


David A. Chapman


Boston College

Richard B. Evans


University of Virginia - Darden School of Business

Zhe Xu


Boston College

September 3, 2010

AFA 2009 San Francisco Meetings Paper

Abstract:     
We examine the optimal portfolio choices of young and old fund managers in a calibrated dynamic life-cyle model of the active manager’s investment problem. The optimal policies of any manager depend on age, the wealth to labor income ratio, the value of the manager’s private information, and recent past performance relative to the benchmark. While age differences alone (with or without learning) do not generate significant differences in the optimal choices of young and old managers, both age combined with wealth and the introduction of learning have an economically significant effect on optimal managed portfolio choices. Simulations of the optimal managed portfolio returns produces measurable differences in the portfolio returns of young versus old managers when we also condition on either wealth or prior performance.

Number of Pages in PDF File: 58

Keywords: Mutual Funds, Career Concerns, Portfolio Choice

JEL Classification: G11, G23

working papers series


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Date posted: March 19, 2008 ; Last revised: September 17, 2010

Suggested Citation

Chapman, David A. and Evans, Richard B. and Xu, Zhe, The Portfolio Choices of Young and Old Active Mutual Fund Managers (September 3, 2010). AFA 2009 San Francisco Meetings Paper. Available at SSRN: http://ssrn.com/abstract=1021363 or http://dx.doi.org/10.2139/ssrn.1021363

Contact Information

David A. Chapman (Contact Author)
Boston College ( email )
Carroll School of Management
140 Commonwealth Avenue
Chestnut Hill, MA 02467-3808
United States
617.552.3989 (Phone)
617.552.0431 (Fax)
HOME PAGE: http://www2.bc.edu/~chapmadb
Richard B. Evans
University of Virginia (UVA) - Darden School of Business ( email )
P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4030 (Phone)
434-243-7680 (Fax)
HOME PAGE: http://faculty.darden.virginia.edu/evansr/
Zhe Xu
Boston College ( email )
140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States
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